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While millions of Americans are still temporarily putting off making their monthly mortgage payments, new data shows fewer people are making requests to enter into forbearance agreements as the U.S. economy begins to slowly reopen.
According to the latest report from the Mortgage Bankers Association, the total number of loans in forbearance increased to 8.16 percent as of May 10, up from 7.91 percent the week prior. That means about 4.1 million Americans have now entered into forbearance agreements.
The good news, however, is that the pace at which homeowners are requesting to put their payments on hold is slowing.
“There has been a pronounced flattening in loans put into forbearance – despite April’s uniformly negative economic data, remarkably high unemployment, and it now being past May payment due dates,” Mike Fratantoni, MBA’s senior vice president and chief economist, said in a statement.
Mortgage rates, which are sitting at historic lows, have allowed Americans to refinance, which has helped people save money by lowering their monthly payments, MBA said.
Another positive sign is that purchase application activity has increased, Fratantoni noted, as states begin to slowly reopen their economies.
Part of the multitrillion-dollar stimulus package passed by lawmakers called for lenders, including Fannie and Freddie, to allow people to put their payments on hold if they are experiencing coronavirus-related financial difficulties.
Last week, the Federal Housing Finance Agency announced a new deferral repayment option for people who have put a pause on mortgage payments. Beginning July 1, Fannie Mae and Freddie Mac will allow borrowers who are able to resume making their monthly mortgage payments to make their missed payments either at the time the house is sold, refinanced or at maturity. That way, the amount due in monthly payments remains unchanged.
Borrowers will not be required to repay missed payments in a lump sum.